Government Committed To Path Of Fiscal Consolidation: Nirmala Sitharaman

The Finance Minister she speaking in the Lok Sabha on the Union Budget Budget 2019 presented last week.

Government Committed To Path Of Fiscal Consolidation: Nirmala Sitharaman

The Finance Minister said the government will invest over Rs 100 lakh crore in infra in five years

Finance Minister Nirmala Sitharaman said on Wednesday that the government is committed to the path of fiscal consolidation without compromising on public expenditure. The remarks from the Finance Minister came as she was defending the first budget of the re-elected NDA (National Democratic Alliance) government in Parliament. Last Friday, Ms Sitharaman proposed a slew of measures from higher taxes on the super-rich and higher duties on fuel, gold and automobile parts while presenting the Union Budget for financial year 2019-20.

Here are 10 things to know:

  1. In the Budget 2019, the government revised its fiscal deficit target to 3.3 per cent for the financial year 2019-20, from 3.4 per cent in interim Budget.

  2. The Finance Minister said the government's intention is to push infrastructure development and invest over Rs 100 lakh crore over the next five years.

  3. The narrower target for fiscal deficit - which occurs when a government's revenue collections fall short of its expenditure - came as a surprise for some economists who had expected the government to raise it to as much as 3.7 per cent.

  4. "We will move GST Council to reduce the GST rate on e-vehicles from 12 per cent to 5 per cent," Ms Sitharaman said. Her response was part of the general discussion on Budget 2019-20 in the lower house of Parliament.

  5. The government retained its estimate on gross borrowings through bonds at Rs 7.1 lakh crore in the Budget Estimate for 2019-20. That marks an increase of 24.34 per cent from the Revised Estimate of Rs 5.71 lakh crore for the year ended March 31, 2019.

  6. Net borrowings through bonds were also maintained at Rs 4.73 lakh crore in the Budget estimates for 2019-20, up 11.92 per cent from the revised estimate for 2018-19.

  7. Some analysts say achieving the goal of 3.3 per cent might be challenging.

  8. "There was widespread expectation of a stimulus to combat the current slowdown," said Anagha Deodhar, economist at ICICI Securities.

  9. "The budget did not announce any stimulus. On the contrary, (it) raised some of the taxes." She also said that the downward revision of the fiscal deficit target was surprising.

  10. The economy has been weakening sharply in the past year. In the fourth quarter of the fiscal year to last March 31, economic growth slumped to 5.8 per cent, the slowest pace in 20 quarters. Growth for the full year ended in March was 6.8 per cent, also a five-year low.  

(With inputs from Reuters)

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